Fed's Beige Book sees some higher costs passed on

NEW YORK (Reuters) - U.S. businesses were able to raise prices for consumers in some areas even as the economy weakened, the Federal Reserve said in a report on Wednesday showing higher energy and commodity prices are causing inflation pressures.

Meanwhile, economic activity was generally weak in late April and through June 2, the period covered by the survey, the Fed said.

COMMENTS:

KURT KARL, HEAD OF ECONOMIC RESEARCH, SWISS RE, NEW YORK:

"You know the prices are up, you know the consumer is getting squeezed -- that is not news. Also manufacturing input prices being up is not new news. They were mixed on commercial real estate, that is actually good news, and there was some pick up in demand on borrowing which is also good news.

The Fed has been very clear on its concerns about inflation and this would support that. Activity is showing mixed signals, generally on the weak side but not dire and so the Fed has basically signaled very strongly it is not going to cut further."

GARY THAYER, SENIOR ECONOMIST, A.G. EDWARDS AND SONS, ST. LOUIS, MISSOURI:

"It looks like the economy is still very weak. The Fed is seeing problems with the employment situation. Hiring is spotty and the wage gains have been very moderate. Up to this point the Fed has been saying that they expected inflation to moderate in coming quarters and there's some evidence of a weak economy keeping wage gains moderate, but they are saying that rising food and energy prices are hurting consumers. Spending is suffering and that's a potential problem for the economy."

SCOTT BROWN, CHIEF ECONOMIST WITH RAYMOND JAMES & ASSOCIATES IN ST PETERSBURG, FLORIDA: